If you can’t beat ’em…
If you can’t beat ’em…INDEPENDENT agents have been urged to introduce Internet cafés into their stores so clients can research holidays.
Speaking at the Toward Europe dynamic packaging seminar, Hotels4U.com sales and marketing director John Harding said such a move would help arrest the decline in high-street travel agency footfall.
Harding quoted figures from Forrester Research showing annual online UK travel sales are predicted to grow from €10 billion to €77 billion between now and 2011.
He claimed this increase would have a dramatic effect on shop footfall. At the Toward Europe seminar, he said high-street agencies now only attract family customers, with customers under 35 years old and empty-nesters using the Internet to book travel.
Thomson has mooted a similar idea to fuel its direct online strategy. It plans to introduce computers to its shops with access to its website and agents helping customers book online.
Harding believes independent agencies should follow suit as travel-focused Internet cafés would encourage customers to come through the doors of agencies, giving agents the opportunity to demonstrate their worth to customers.
“Footfall for travel agents in the high street is a serious problem,” Harding said. “There is just not enough of it, as young and older people no longer use travel agents.”
He said agents could limit content accessible from the cafés or let customers use no-frills airlines sites and then sell them accommodation.
Harding even suggested agencies could white-label suppliers’ sites for the Internet cafés, then receive the commission if a holiday was booked.
“If customers come into agencies to research holidays on the web then at least the agency has a chance of getting the sale,” Harding added.
‘We are the new elite’
LEADING accommodation-only suppliers are now more important to independent agencies than the big four, says On Holiday Group sales director Brian Young.
Young claimed the leading three accommodation-only providers – On Holiday Group, Med Hotels and Holidays4U.com – now have a similar hold on the sector as the big four do on package holidays.
The rise of dynamic packaging – partly fuelled by commission cuts among some of the major operators – has led his and similar companies to “replace vertically-integrated operators for the independent agencies,” he said.
Young predicted other accommodation-only suppliers would fall by the wayside due to the power of ‘the new big three’.
He believes the buying and distribution power of the three companies would cause other suppliers to struggle.
“There will be casualties in the market as it matures,” he said. “We are the equivalent of the vertically integrated companies for the dynamic packaging sector.”
Tech a step backwards
TECHNOLOGY isn’t driving dynamic packaging – it’s holding it back.
That’s the claim by Dolphin Dynamics president Roberto Da Re, who said travel websites are unable to dynamically package as well as travel agents because technology systems limit sites’ access to stock.
Da Re said technology only allows sites to access stock from one supplier or system for each product, for example one car hire company or one global distribution system.
However, agents are able to compare prices and product from a number of suppliers.
“There is still a lot that can be done with technology,” he said. “Yet it’s perceived to be pushing dynamic packaging.
Technology is struggling to catch up with dynamic packaging and replicate what travel agents do.”
He also criticised websites for lacking relevant information to help convert sales.
Da Re added there are good technology systems in the market but conceded they are expensive.
Playing second fiddle to big four
MID-SIZED tour operators will be forced to follow Thomson’s lead and slash commissions while pursuing a direct online distribution strategy.
On Holiday Group sales director Brian Young predicted the leading operators under the big four – including his former employer Cosmos Holidays, as well as Libra Holidays and Olympic Holidays – will cut commission to 7% as third-party sales dry up.
Young conceded Thomas Cook and Airtours are still committed to trade sales with commission levels of above 10%.
However, he said both operators have given agencies stretching targets, which has resulted in agents focusing their time and marketing on them at the expense of selling second-tier operators.
“Independent agents are spending their time protecting the commissions from the big four,” Young said. “This means the other operators will be forced to grow their business against their current focus.”
Young added Cosmos Holidays was in a good position to grow direct sales online due to its strong consumer brand.